Biote (BTMD) Q2 2026 earnings review
Recall Fallout Extends, Sinking Margins and H2 Growth Hopes
Biote's Q2 results reveal that the January product recall was not just a temporary Q1 blip. Procedure revenue plunged 13.9% year-over-year, dragging total revenue down 9.5% to $44.2M. The reliance on costlier third-party suppliers to replace constrained in-house production crushed gross margins (65.4% vs 71.6% YoY) and pushed the company to a $(3.5)M operating loss. Most surprisingly, management abandoned their previous promise of returning to year-over-year procedure growth in the second half, now projecting continued YoY declines. This guidance cut severely damages the 'temporary disruption' narrative.
🐂 Bull Case
Management expects procedure revenue to improve sequentially in Q3 and Q4 as inventory levels at Asteria Health normalize. The worst of the supply shock appears to be in the rear-view mirror.
Despite the core business weakness, dietary supplements grew 5.7% to $11.4M. This segment continues to provide a vital, high-margin revenue floor.
🐻 Bear Case
Procedure revenue has now shrunk year-over-year for five consecutive quarters. The January recall exacerbated the problem, but it did not start it.
Adjusted EBITDA margin collapsed from 31.1% a year ago to 12.6%. The company is burning through its previously strong cash generation profile to survive supply chain fixes.
⚖️ Verdict: 🔴
Bearish. Management's credibility took a severe hit this quarter. The severe guidance cut to Adjusted EBITDA (from >$38M to >$25M) and the admission that H2 will not see YoY growth proves that the turnaround is much further away than pitched 90 days ago.
Key Themes
The 'Temporary' Recall Excuse Meets Data Reality
In Q1, management heavily pushed the narrative that the January Asteria Health recall was a one-time disruption and H2 would return to growth. Q2 data completely contradicts this. Procedure revenue fell 13.9%, and H2 YoY growth guidance was entirely scrapped. Furthermore, procedure revenue was already declining mid-single to low-double digits throughout FY25 before the recall even happened. Blaming the current financial deterioration solely on the recall masks deeper structural attrition issues.
Margin Collapse from Third-Party Sourcing
Gross margin deteriorated by 620 basis points YoY to 65.4%. The company was forced to buy replacement pellets from third-party suppliers at much higher costs due to the Asteria Health shutdown/slowdown. Combined with a 4.1% increase in SG&A expenses (driven by a recently expanded sales force with nothing to sell), Adjusted EBITDA margin was crushed, falling from 31.1% to 12.6%.
Asteria Health Inventory Normalization
The company's primary operational driver moving forward is returning Asteria Health to full capacity and normalized inventory levels. Management notes this will allow a shift away from expensive third-party pellets, restoring gross margins and fulfilling backlogged practitioner demand, setting up expected sequential revenue growth in Q3 and Q4.
Dietary Supplement Business Growth
Dietary Supplements grew 5.7% YoY to $11.4M. While this is a stark deceleration from the 19.1% growth seen in Q1, it remains the only segment posting positive volume gains, supported by e-commerce expansion.
Strategic Overhaul & Sales Force Expansion
Despite immediate top-line struggles, the company continues to lean on its expanded 120-person sales force and new technology platforms. Management insists these 'foundational improvements' will eventually yield a more resilient business and accelerate sales productivity, though tangible financial benefits remain elusive.
Regulatory Risk in Focus
The operational chaos of the last six months highlights the acute regulatory risks inherent in the 503(B) compounding pharmacy space. The FDA-supervised voluntary recall exposed Biote's lack of supply chain redundancy, proving that any regulatory hiccup at their primary manufacturing node can instantly wipe out 60% of operating profits.
Other KPIs
A massive 63% deceleration from $15.2M a year ago. The severe drop perfectly illustrates negative operating leverage: as high-margin procedure volumes fell, the fixed costs of a recently expanded 120-person sales force quickly consumed the remaining profitability.
Reversing sharply from a $10.8M operating profit in 25Q2. Beyond gross margin compression, selling, general and administrative expenses ballooned to $32.4M from $24.2M YoY, highlighting the cost of Biote's aggressive operational restructuring during a revenue contraction.
Down significantly from $24.1M at the end of 2025. While operating cash flow historically buffered the company, the combination of a $18.5M share repurchase settlement paid earlier this year and evaporating net income leaves the balance sheet with a much thinner margin of error against its $121M term loan.
Guidance
Decelerating. Management drastically slashed guidance from the previous target of 'Above $190 million'. This implies a significant full-year YoY revenue contraction and formally abandons the thesis that H2 would act as a growth-fueled catch-up period for Q1/Q2 supply shortfalls.
Decelerating violently. Cut from the previous target of 'Above $38 million'. This acknowledges that the margin damage from third-party pellet sourcing and sales force deleverage is deeply structural for the current fiscal year.
Stable compared to prior guidance. However, actual Q2 growth was only 5.7%, suggesting the segment will need to stabilize or slightly accelerate in H2 to meet the higher end of this outlook.
Key Questions
Procedure Demand vs Supply
You've abandoned guidance for YoY procedure revenue growth in H2, citing the 'first-half disruption.' At what point does the 'temporary supply recall' excuse end and structural clinic attrition/demand destruction begin?
Timeline for Asteria Margins
With gross margins plunging to 65.4% due to third-party sourcing, what is the exact timeline for Asteria Health to return to a 50%+ production share, and what is the target gross margin exit rate for Q4?
Sales Force ROI
You expanded the sales force to ~120 reps leading into this year to drive new clinic acquisition. Given the guidance cut, are you considering pausing further commercial investments until Asteria supply is fully stabilized and can support that growth?
Supplements Deceleration
Dietary supplement growth decelerated sharply to 5.7% this quarter after running in the mid-to-high teens. Is this deceleration collateral damage from the drop in clinic procedure traffic?